Most marketing focuses on getting more customers. This seems the obvious place to begin marketing but actually, it’s the worst place to start. And so, exposed is the fatal flaw in most marketing strategies. Here's why:
Fundamentally, you want your marketing to generate as much money for you as quickly as possible. Here’s a diagram to explain this.
I call it The Hierarchy of Money. What it shows is that your ability to earn more money is related to the type of relationship you have with people external to your business. Put simply it's easier to make sales with people who know you (customers) than people who don’t (suspects).
Below is a four-point plan that will help you quickly generate income directly into your business, and also maximise your marketing return on investment.
First, I want you to imagine you’re standing in a field, and right at your feet is a big pile of money. Fifty metres away is another pile, 150 metres away, there's another and a fourth pile 300 metres away. If I asked you to collect as much money as you possibly could, in as short a time as possible you would start with the money that was right at your feet, and then you would move out to the next getting further away each time. What you wouldn’t do is run right to the furthest point 300 metres away, then start grabbing the money and work your way back in. That would be a bit weird. But, oddly this happens, an awful lot in marketing - businesses, shoot for the most difficult money first and leave the money that's lying in their feet, until last. (And that's the flaw; starting with the most expensive and time-consuming marketing first when there are easier sales you can make first.)
Let's convert the money into people who are going to give us money, of which there are four types.
Businesses, shoot for the most difficult money first and leave the money that's lying in their feet, until last
The first group, and those closest to you, are your customers - they know you and have already spent money with you so they're pretty comfortable and confident about buying from you again. Selling to them is relatively easy. But at the furthest point away from us are suspects. These are people who don't know you. They don't know your service or product. They may not even realise that they have a need for what you supply and they are, consequently, quite difficult to sell to because you have to overcome all sorts of objections and confidence factors in order to get them to part with their money.
It makes sense then for us to start with those people who are easiest to generate money from, our customers. So, let's talk a little bit about them. Now you'll probably find that there are two tiers to what you sell in your business. The first is what we call a lead product or service, and this is the thing that people tend to buy first from you when they become a customer. It's also the thing that they buy most often and contributes to the largest amount of your income. But there's also a second tier, and that's what is called a “back-end” – it’s made up of all of the allied products and services that you can supply after that initial lead sale has been satisfied.
So as an example, if you are a stationery company, people may come to you because they want paper. But after that, they may buy things from your back end like pens, folders and filing cabinets from you.
Identify who bought what by creating a back-end customer matrix
There is a huge amount of income to be generated from that back-end. The key is to identify who bought what and we can do this by creating a back-end customer matrix.
Grab your favourite spreadsheet and down one side you list all of your customers and across the top list all of your products/services. Next fill in the cells where somebody has bought something. All the opportunities for sales are in the cells you’ve yet to fill in because it represents all the customers who have yet to buy that product or service. All you have to do is pick up the phone or get in touch with your customers and talk to them about the things that they have yet to buy from you.
The next group are prospects who are people that have communicated with you or left their details with you, but for whatever reason, didn’t turn into customers. It’s worth getting in touch with them to see if there's something that you can do to overcome whatever objection they had and get them to buy from you.
There's a second subset of prospects which is worth paying attention to, these are your old customers - people that bought from you once or twice in the past, but haven’t bought from you recently. Now if you've been in business for a number of years you can have a long list of old customers so they are definitely worth reigniting and bringing back on board.
The third tier is referrals. These are people that have been recommended to you by customers, prospects even by suppliers, family, friends, etc. - they can be from anywhere even social media is great for creating referrals. They have come to you because somebody else has said, you're worth talking to and you've got a great product or service.
Just a couple of things to remember about this:
First, this is really a powerful way of generating new business so much so that some businesses rely exclusively on this marketing method. So, it’s worth having a think about who, amongst your customers, prospects, family members, etc, could potentially refer you to somebody else who might want to use your business.
Think about who, amongst your customers, prospects, family members, etc, could potentially refer you
Second, you need to your referrer a reward that is equivalent, or greater in value than the time that they've spent referring you. Obviously, you don't want to be giving away all of your profits in the referral process, but certainly giving away something to your referrer is going to make them want to carry on referring you to others. And, of course, this is an easy way of generating customers because now you've extended your sales force to include customers, people on social media, suppliers, etc.
The fourth and final group of people are what we call suspects. These are people who don't know you, are not aware of what your business sells, and may not even know they need your product or service.
These are the hardest punch to pitch to because you've got to advertise to them and then overcome any objections that they may have to buy from you or switching from their current supplier
In fact, if you think about the way in which we've structured this four point-plan (customers, prospects, referrals and suspects), you can see that you are increasing the amount of marketing spend as you get further away which means that the return on investment is going to be lower the further away you get.
Naturally, we should always be prospecting, and we should always be getting out there and advertising. But you should concentrate your sales and marketing efforts on where the money is in relation to you and how quickly you can access it; customers first, then your prospects, then referrals and then suspects, right at the end.